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The method meant Madagascar, one of the world’s poorest countries and the biggest producer of vanilla, was hit with a rate of 47 per cent.
Africa impact
South African Trade Minister Parks Tau told reporters that his team didn’t understand how the US assessed his country’s charges tariffs of 60 per cent. Pretoria’s own calculations indicated a rate of 7.6 per cent but a 30 per cent tariff will now be levied on Africa’s biggest economy in retaliation.
“We are speculating what the US is calculating this on, we assume it could include the trade balance, it could include other considerations, but at this point we’re going to need clarity from the US as to how they arrived at the number,” he said.
In 2023, South Africa had a $US4.2 billion trade surplus with the US, its second-biggest trading partner. Tau said the tariff on neighbouring Lesotho “literally will devastate” the country of 2.3 million people that relies on exports of diamonds and clothes.
Botswana, which relies almost exclusively on diamond exports, had a 37 per cent tariff slapped on it even as its mines minister was in the US last month promoting sales of the gems in the world’s biggest market for them. Ivory Coast, the world’s biggest cocoa exporter, now has to contend with a 21 per cent tariff.
A warehouse stores sacks of cocoa beans for shipment abroad in San-Pedro, Ivory Coast.
A warehouse stores sacks of cocoa beans for shipment abroad in San-Pedro, Ivory Coast.Credit: Bloomberg
The move marks an about-face in American trade policy following World War II that promoted economic integration as a means to help developing nations and advance Washington’s interests abroad. In 2000, then-president Bill Clinton pushed through the African Growth and Opportunity Act, which provided eligible sub-Saharan African countries with duty-free access for more than 1800 products.
Former US president George W. Bush expanded it in 2004 and promoted initiatives that would help countries bring products to US consumers. That program is up for renewal, alteration or termination in September.
“African countries are being penalised for having trade surpluses, some of them achieved by pursuing export-driven development policies, as advised by the US,” said Yvonne Mhango, Bloomberg’s Africa economist. “Most African countries export raw materials to America. One of Trump’s arguments for these tariffs is to bring back manufacturing jobs to the US. Slapping high tariffs on Africa is not going to help.”
Most of US-Cambodia total trade of $US13 billion last year comprised manufactured goods like clothing and footwear made in Cambodia and sold to American consumers.
Most of US-Cambodia total trade of $US13 billion last year comprised manufactured goods like clothing and footwear made in Cambodia and sold to American consumers.Credit: Bloomberg
China influence
For many nations, particularly in Asia, the rise of China disrupted their economic dependence on the US. Many cultivated ties with Beijing to draw badly needed investment and financing for infrastructure. That left many smaller countries feeling pressured to choose sides.
Cambodia, whose two biggest trade partners are China and the US, had already been veering towards Beijing, the country’s largest source of foreign investment. Most of US-Cambodia total trade of $US13 billion last year comprised manufactured goods like clothing and footwear made in Cambodia and sold to American consumers.
Cambodia’s government spokesman Pen Bona said via text message he couldn’t yet comment on the tariff, and the matter was being reviewed.
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In Bangladesh, which is also heavily reliant on the US market for its garment exports, the government said it was looking at ways to lower tariffs to maintain its trade access.
“Bangladesh is reviewing its tariffs on products imported from the United States,” said Shafiqul Alam, press secretary to interim leader Muhammad Yunus. “The National Board of Revenue is identifying options to rationalise tariffs expeditiously.”
Exporters in Sri Lanka, which suffered a sovereign debt default in early 2022 that triggered the worst economic crisis in the country’s post-independence history, meanwhile warned they are unable to absorb the 44 per cent tariff imposed on the island nation. The US is Sri Lanka’s largest market, accounting for 23 per cent of total exports in 2024.
Analysts questioned the fairness of the US tariff calculations, given the over-sized impact it had on the poorest nations.
“In particular, it punishes small developing countries like Cambodia that simply don’t have the capacity to buy much from the US,” wrote Tommy Xie, head of Asia macro research at Oversea-Chinese Banking Corp.
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It could also jeopardise funding from the International Monetary Fund for Sri Lanka, Pakistan and Bangladesh as it will make it harder for them to hit the targets set for them in bailout programs, Ankur Shukla, a Mumbai-based economist for Bloomberg Economics, said in a report.
Asian nations are also wary of a flood of cheaper Chinese goods in their markets as a result of the knock-on effects of higher US duties. China was charged a 34 per cent reciprocal tariff rate – stacked on top of 20 per cent duties Trump already imposed this year.
“China’s attempts to find new markets for goods previously destined to US will have to go somewhere at least in the short term,” said Elms of the Hinrich Foundation. “This is going to set up new tensions with neighbours.”
Bloomberg
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